Friday, March 2, 2012

BP finishes first test production well drilled to Sag River

Tim Bradner
Alaska Journal of Commerce

BP has completed the first of five pilot wells drilled to test production from the Sag River formation that overlies the main producing reservoir of the Prudhoe Bay field, company officials told state legislators Feb. 23.

The test wells involve long, extended horizontal production wells, drilled from the surface at an angle and then turned horizontally to intercept the thin production layer of rocks.

The first well was drilled with a 6,700-foot horizontal production section through a thin layer of oil-bearing reservoir about 20 feet thick, Damian Bilbao, BP’s Alaska resources and development director told the Senate Resources Committee.

If the wells are as productive as hoped, BP could develop 200 or more production wells in the Sag River over a 10-year period, adding 150 million to 220 million barrels of new reserves to the Prudhoe Bay field, Bilbao said. The investment required would be $270 million to $610 million.

BP is also considering testing the Sag River formation in the nearby Milne Point field, which could add 10 million to 50 million barrels of oil.

In other developments, Claire Fitzpatrick, BP’s chief financial officer, said the company is continuing work on a pilot heavy oil production project at the Milne Point field. However, even if technical problems are worked out and BP is able to produce oil from the large Ugnu oil deposit, economically it would be at least 10 years before any significant amount of oil, such as in the range of 10,000 barrels per day, is produced, Fitzpatrick told the senators.

BP’s first heavy oil production test at Milne Point was encouraging, with a horizontal well producing about 650 barrels per day over a 100-day period, state Oil and Gas Director Bill Barron said in a presentation to the committee earlier in the day. Barron said BP is now searching for a specialized rig to drill more of the heavy oil test wells. These would employ the CHOPS technology (Cold Heavy Oil Production with Sand) that is used in Alberta and that BP will adapt to the North Slope.

The first heavy oil test well was drilled using a more conventional horizontal production well in the Ugnu, and it worked better than BP expected. This well is now off production so that BP can modify pumps used in the process. Ugnu heavy oil has a quality that ranges from 10 to 15 degrees API and is technically challenging. In comparison, conventional crude oil in the Prudhoe Bay field has an API gravity of 29 degrees API.

However, there is a large resource, an estimated 23 billion barrels of oil, in the deposit, which is shallow and overlays the deeper, conventional fields in Prudhoe Bay, Milne Point and Kuparuk River.

While only a part of the resource will ever be produced, even a 10 percent to 15 percent recovery would be a large amount of oil. One other challenge with heavy oil is that it cannot flow by itself through the Trans Alaska Pipeline System. It must be mixed with conventional light crude oil so that the combined liquids will flow.

On other matters, Fitzpatrick said a record number of Prudhoe Bay production facility “turnarounds,” or major maintenance projects this summer. This will mean a drop of production and oil moving through the Trans-Alaska Pipeline System this summer.

Fitzpatrick said BP will also expand, and in fact will double the application of a proprietary Enhanced Oil Recovery technology the company has developed. The Bright Star EOR process involves injection of polymers to improve the effectiveness of oil recovery in waterflood.

Another proprietary EOR process, called Low-Sal also will be tested at Prudhoe Bay this year by BP. Low-Sal involves the use of low-salinity or even fresh water in a waterflood instead of the briny formation water or even seawater currently used.

Low-Sal has been tested by BP at the nearby Endicott field in past years and has been found to be effective in improving oil recovery.

Fitzpatrick said BP also plans a large summer offshore seismic program in the Simpson Lagoon area north of the Milne Point field. Substantial sections of the Milne Point field extend out under the ocean and are produced with extended-reach production wells drilled from shore. The seismic will identify opportunities for fill-in drilling, she said.

Other plans at Milne Point, which will depend on results of the summer seismic program, include additional in-fill drilling and pad expansions that could add 25 million to 35 million barrels of reserves.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.